The Super Micro Computer (SMCI, Financial) is struggling to meet its obligations, as another source revealed that NVIDIA (NVDA, Financial) pulled out a large order from a Taiwanese firm that has been quick to pick up. Recent claims reveal that NVIDIA has resorted to sourcing its massive AI server orders from SMCI’s competitors instead. This is a turning point for SMCI, which has been among NVIDIA’s significant clients for some time. It got worse when the firm put brakes on its expansion in Malaysia, stopping plans for a gigantic AI data center project for YTL Group. SMCI’s main client, YTL, planned to utilize NVIDIA’s high-performance AI servers throughout a facility to become one of the largest supercomputers globally.
Consequently, YTL has changed the nature of its order to Taiwan Wistron Group, endangering SMCI’s position in the market even further. Disruption comes after Super Micro has faced a series of legal and financial problems. The company is accused of financial misconduct, the preliminary investigation by the Department of Justice, and the possibility of getting delisted from Nasdaq. Worse still, SMCI’s CEO Charles Liang admitted that the company has been unable to source enough new Blackwell chips from NVIDIA, a problem that has worsened operations. It is important to note that Super Micro’s recent instability shows that such operations need not promise a happy future for a company: too much hanging in the balance, too much competition, too many potential vulnerabilities that can be exploited, and suddenly a company that once seemed like a vital supplier to some major players in the electronics manufacturing industry such as NVIDIA might find itself reeling. Investors and stakeholders must carefully follow their progression to understand these developments fully.
This article first appeared on GuruFocus.
